MEET THE EXPERT:
Mary Scott Nabers is President/CEO of Strategic Partnerships, Inc., a full-service business development firms specializing in the public sector and public-private partnerships (P3s). A former statewide Texas office holder, Mary founded SPI in 1995 to help clients identify and capture government contracts. Author of Collaboration Nation - How Public-Private Ventures Are Revolutionizing the Business of Government, Mary also serves on the Clinton Global Initiative’s Infrastructure Financing for Cities Task Force. She has delivered keynote speeches at numerous conferences and has been published by Forbes, CNBC.com, CEO- Read, and Change This.
Infrastructure contractors have good reason to look forward to 2017, based on the emerging positive trends and encouraging new developments.
A highly touted and promised federal infrastructure plan plus an abundance of private capital waiting to be tapped will likely result in the launching of hundreds of large new public sector projects by early 2017. At least that’s what thousands of government contractors, economic development supporters and unemployed individuals hope will happen.
President-elect Donald Trump has promised to infuse at least $1 trillion for infrastructure spending. And, while his plan must be approved by Congress, there is widespread support and most believe it will be difficult for Congress not to comply.
THE COMING STIMULUS
While much is still unknown about Mr. Trump’s program, some things are known. More than $936 billion is needed immediately for infrastructure investment. Funding is long overdue for highways, bridges, aviation, ports, inland waterways and public transit, passenger and freight rails. The nation’s public infrastructure assets are deteriorating and Congress has in recent years deferred sufficient funding for repair and replacement. The Trump formula, much of which still remains a mystery, is said to be a 10-year plan that insiders say will be launched in the first 100 days of the new administration. Some items purported to be under consideration in this plan include:
- Federal tax credits totaling $137 billion for private investors who capitalize public transportation projects.
- Private capital will be sought through public private partnerships (P3s);
- A national infrastructure bank would be created and capitalized to provide low-interest loans for infrastructure projects;
- Federal permitting and approval processes would be changed and streamlined to mitigate the bureaucratic red tape that has translated into extremely costly project delays in the past; and
- Additional infrastructure funding could possibly come from a one-time 10 percent tax on corporate revenues stored overseas that are repatriated and returned to the U.S.
RECENT VOTER-APPROVED FUNDS
Other infrastructure funding has also been made available recently. Seeking to take advantage of current low interest rates and mindful of the continued deterioration of local infrastructure, voters nationwide approved more than $200 billion in local and state bond and tax initiatives in 25 states in November.
Taxpayers understand the importance of all types of infrastructure, especially transportation.
Regardless of the size of Mr. Trump’s infrastructure plan, there will be new funding for infrastructure projects in 2017. Increased funding sources include:
- The Federal Highway Bill – FAST Act
- Several states have increased gas taxes to fund road construction
- Statewide water propositions passed in California and Texas
- Statewide transportation propositions were approved in Texas and Maine
- Local governments like Los Angeles, San Francisco and Seattle have passed large transit propositions
- Two states (Illinois and New Jersey) passed “lockbox” initiatives to ensure that state transportation-related funds are not diverted to other purposes
PUBLIC PRIVATE PARTNERSHIPS
Critical infrastructure needs and tight government budgets have made public private partnerships an attractive funding alternative. P3s should gain even more support by having a builder/developer occupying the White House for the next four years. Many P3 projects have already been announced. Examples include:
- UC Merced expansion – The University of California has embarked on a $3.6 billion project for design, construction and maintenance of new buildings on the UC Merced campus. Some work has started and future P3s are planned for billions of dollars’ worth of deferred maintenance projects and seismic repairs.
- New Maryland courthouse – Howard County officials are proposing a $128 million P3 to finance a new courthouse to replace the aging, overcrowded facility that hasn’t seen renovations in the last three decades.
- Omaha VA medical facility – A P3 to plan, design and build a new Veterans Administration hospital in Omaha is awaiting congressional action. Federal funding of $56 million has been secured for the project, which will also include private donations.
- LA Metro – With the recent approval of a sales tax increase in Los Angeles County to fund transportation projects, Los Angeles County Metropolitan Transit Authority is expecting to enter into a variety of P3 projects.
GREATER OPPORTUNITY FOR CONTRACTORS
There is widespread evidence of support for infrastructure spending throughout the country along with new funding for projects that public officials are eager to launch. With the expectation of perhaps up to a trillion more in additional funds over the next decade, government contractors are preparing for what promises to be a much better year ahead - a welcome change from years of under - investment in this important market.